Home news Restaurant downturn prompts Cote review

Restaurant downturn prompts Cote review

34
0


The restaurant chain Cote is examining plans for a wave of site closures, underlining the slowdown which threatens thousands of jobs across Britain’s casual dining sector.

Sky News has learnt that Cote, which is owned by the private equity firm BC Partners, is seeking to shut down a number of restaurants which trade under the Limeyard and Jackson & Rye brands that the company bought in 2016.

The plans, which have yet to be finalised, would affect a relatively small number of outlets, and would not include the main Cote-branded operation, which is said to be performing resiliently in tough market conditions.
Sources said that Cote had still to decide how to implement the changes to its estate but one potential option – an insolvency mechanism called a Company Voluntary Arrangement (CVA) – would probably be poorly received by landlords.
CVAs have been used with increasing frequency by distressed retailers and restaurant chains as a quick-fire route to shedding underperforming leases and reducing rent obligations.
Toys R Us, Carpetright, New Look, House of Fraser and the casual dining chain Prezzo have all announced proposals for CVAs in recent months, although some have yet to be approved or implemented.
The mechanism is supposed to be a last resort before insolvency, and property industry sources said it was unlikely that Cote would be in a position to demonstrate that its future was in jeopardy unless a CVA was approved by creditors.

That is likely to mean that Cote will pursue other means to exit poorly performing restaurants including disposals or rebranding them under the Cote name, they added.
Cote was bought by BC Partners in 2015, and said in accounts filed at Companies House for the year ended 30 July 2017 that its board was “very pleased with the performance…despite the challenging economic conditions facing our industry”.
The company said total sales growth during the period was 15.8%, with like-for-like growth of 4.1%.
In a statement issued to Sky News, a spokesman for Cote said: “As a result of recent and well-documented headwinds for the restaurant sector, we have taken the decision to explore a range of options for a very small number of Jackson & Rye and Limeyard restaurants.

More from Business

“In some instances we have closed or sold outlets, and we are working hard to find viable options for others while continuing to support those that are trading well.
“Our Cote restaurants continue to perform well, which is a testament to the strength of that offer in what remains a very challenging environment.”

Source: SKY